Tips on interviewing financial advisers

By Christopher F. Poch

Readers frequently request guidance on how to evaluate advisory firms. This new series of articles will present information on how to interview and compare advisers in a variety of disciplines.

Do your homework
• Determine your advisory needs. Do you require financial planning, estate planning and trust services? Will you need lending, insurance, philanthropic and tax planning advice? Do you want assistance with business governance and succession planning?

• Write down your expectations of your wealth adviser. Be able to clearly describe what you are seeking. Prepare an evaluation “scorecard” in advance and decide which will be the most important factors.

Understand the business models
The business model of the firm you select will influence the products the firm sells and the services it offers — and thus your client experience. All business models have benefits and limitations.

• Asset managers. These firms generally sell their own money-management services. Assess whether the services included — such as retirement income planning, asset allocation and tax and trust education — offer adequate breadth and expertise.

• Trust companies. A trust company is a legal entity that manages trusts, trust funds and estates and is often attached to a bank. The better ones have extensive trust, tax and planning expertise. Investment results can vary widely.

• Registered investment advisers (RIAs). RIAs are independent entities that have registered with either the Securities and Exchange Commission or a similar entity in their state of domicile. They have a fundamental obligation to act in their clients’ best interests. Most RIAs affiliate with large custodians for products and support. The segregated operational aspect adds a level of administrative complexity.

• Large banks. Banks that offer a broad array of products may be preferred by those who prize choice and convenience. Many consumer-oriented banks with a primary focus on traditional banking products may fall into this category.

• Ultra-high-net-worth units of banks and financial services firms. The units tend to have fewer clients per adviser than traditional brokerage firms do and are staffed by better-trained professionals.
Your team of advisers should cover the array of important matters and should have enough knowledge to discuss their colleagues’ recommendations. Income tax, estate tax, insurance and investments are the core four areas. Lending, legal structures, deferred compensation and employee benefits are a plus.

Questions to ask
When interviewing, take notes. Summarize your understanding and email it to the adviser. Ask for clarification on points you’re not sure you understood.

1. How does the advisory team get paid? Does compensation vary based on the asset or product mix? Alternative investments, structured notes and insurance are usually not included in these fees. If multiple fees can be layered, be leery. Compensation drives behavior.

2. Do the adviser team’s experience, knowledge and training exceed your needs? Do the products and services span all your current and future needs, or just the most important for today? Request samples of work product that meets the complexity of your needs. For example, you could request sample financial plans or flow charts, or hypothetical asset accumulation and distribution illustrations. This will give you a sense of the depth and sophistication of the planning.

3. What objective methods does the firm use to measure proficiency? No firm or adviser does everything well. Ensure that the firm you choose has expertise in the services you require.

4. Which services are provided, how frequently and by whom? How often will you meet in person? Who will be the primary contact for administrative items, and who will give the financial advice? How quickly does the adviser team return calls and emails? Answers to these questions offer insight into the client experience. Make sure that the day-to-day experience includes clear reports, an up-to-date website and, when preferred, intelligent human interaction.

5. Is the adviser a fiduciary (i.e., is the adviser obligated to put the client’s interests above their own)? Does the firm operate only on a fully disclosed transparent cost basis (including fees and other adjustments)? Under what circumstances might the adviser act as a principal or a broker? These questions will help you understand the adviser’s abilities and economic motivations. For example, some clients prefer to buy and hold a stock or bond without incurring a recurring fee. In this instance it would be preferable if your fee-based adviser were also able to act as an agent or “broker” and receive a one-time fee.

6. What are the all-in costs? How might the costs change as the portfolio changes? Some firms entice prospects by initially recommending low-cost investment products, only to change down the road.

High-quality wealth management firms generally charge between 0.75% and 1.5% on assets under management. (See Michael Kitces, “Financial advisor fee comparison: All-in costs for the typical financial advisor?”, July 31, 2017.) If the fees are lower, ask how the firm is making up the difference.

7. In addition to the above questions, ask for references. While you will never be given the name of someone who will offer a bad recommendation, it’s still worth it to call the references. If the firm offers the names of sophisticated, experienced professionals who have worked with the advisers for a long time, it is a good indication.

One vs. multiple providers
Having more than one financial adviser can be a good idea, but only if you are willing to invest the time to balance what you hear from the various providers and sift through the differences.

Despite the limitations, I recommend selecting one high-quality firm as your financial adviser. Enlist your tax, insurance and other advisers to be the “watchdogs.” Once a year, ask all advisers for their opinion of each other. Good advisers will tell you the truth. Weak advisers should be replaced.

Christopher F. Poch is a private wealth advisor at Morgan Stanley Private Wealth Management, advising private clients and family offices. He has managed international private banking units, advised billionaires and heads of state, and served as the chief executive of a trust company (

Copyright 2019 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permisison from the publisher. For reprint information, contact


Article categories: 
November/December 2019


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  • Tips on interviewing financial advisers

    Do your homework
    • Determine your advisory needs. Do you require financial planning, estate planning and trust services? Will you need lending, insurance, philanthropic and ta...